Landmark deal transforms South African securities industry

Feb 12, 2019

Acting as sole financial advisor, structurer and financier, Standard Bank’s innovative funding of Nkholi Consolidated Investments’ (Nkholi) ZAR 760 million purchase of Peregrine Securities has seen the creation of Legae Peresec, South Africa’s largest securities trading business. 

Legae Peresec is the entity emerging from the combination of Peregrine Securities and Legae Securities, South Africa’s oldest black stockbroker. Legae Peresec is 51% black owned and managed with more than 30% black female ownership. Shareholders are broad based and will predominantly be management and staff of the firm.

When approached by Nkholi for a funding solution for this landmark black economic empowerment transaction, “Standard Bank came up with an innovative funding structure, which enhanced the economics of the transaction for Nkholi.  The bespoke structure made it possible for Standard Bank to fund a substantial portion of the transaction on its own,” said Jonas Malebye, Head, Investment Banking South Africa at Standard Bank.  

The new black-empowered and entirely independent firm will be large enough to compete with local and international banks, “using our excellent capital position to drive transformation and continued growth in the sector by providing our clients access to increased liquidity and capital, world class financial technologies and more robust risk management processes,” said Tshepo Maseko, Chairman of Legae Peresec and responsible for the company’s trading technologies. 

Standard Bank’s strategic guidance and innovative funding was central to the success of this dual purchase and merger transaction in South Africa’s highly competitive stock broking industry. Standard Bank will continue to partner with Legae Peresec, “as we grow our business and deepen transformation by supporting new entrants to South Africa’s securities sector,” said Lester Bailey, who heads Legae Peresec’s Prime broking and custodial services offering.

Going forward, Standard Bank, as a banking partner to Legae Peresec, will continue to support the growth of the business. Standard Bank will also manage the new entities’ custody and clearing business.

“Growing tomorrow’s corporate champions in a way that expands South Africa’s securities ecosystem through inclusive growth is critical to future-proofing our economy by locking in sustainable long-term growth that is relevant to all. Standard Bank is committed to the transformation of our economic landscape,” said Mr Malebye. 

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